Swiss central bank supervisory council member Gerold Buehrer said Philipp Hildebrand’s replacement as president should be found sooner than April, suggesting the government’s hiring timetable is too slow.
“I can’t imagine that we’ll wait” until April or May, Buehrer, who is also head of the Economiesuisse business lobby group, told reporters in Zurich today. “I don’t fear that there will be a power vacuum at the top of the central bank.”
The Swiss National Bank (SNBN) supervisors are considering candidates to join the three-member Governing Board after Hildebrand announced his resignation on Jan. 9. Swiss President Eveline Widmer-Schlumpf said in Bern yesterday that it’s probably “a matter of a few months, maybe April or May” for the government to appoint a replacement based on the Bank Council’s recommendations.
Buehrer called Hildebrand’s resignation “inevitable” and Widmer-Schlumpf said at an event in Geneva today it’s “now important” to restore confidence in the central bank. She yesterday called Thomas Jordan, 48, who was appointed interim president on Jan. 9, a “very competent personality.”
Former hedge-fund manager Hildebrand stepped down after failing to prove that his wife acted independently on a currency purchase of $504,000 in August, a month before the SNB imposed its first franc cap in three decades. His wife, Kashya Hildebrand, told Swiss television there was an “error of judgment” and the “transaction should have been reversed.”
The SNB’s 11-member supervisory council is looking for a candidate as the central bank seeks to defend its franc ceiling of 1.20 versus the euro. While the franc surged after Hildebrand’s resignation to as high as 1.2108, it weakened later that day. It traded at 1.2113 at 11:39 a.m. in Zurich.
Buehrer said today that the Zurich-based SNB still has a “good, intact, credible” board.
“Usually, scandals are bad for currencies, not good,” he wrote in an e-mailed note today. “But the SNB is not a ‘normal’ central bank at the moment. A central bank arguably needs a great deal of credibility to achieve such a target and presumably the undermining of this credibility by Hildebrand’s actions is the reason” why the franc strengthened.
While either Jordan or fellow board member Jean-Pierre Danthine could in theory be named chief immediately, the government prefers to wait for the Bank Council’s recommendations on a new board member before deciding who will replace the chairman, according to Widmer-Schlumpf. The current deputies are Thomas Moser, Thomas Wiedmer and Dewet Moser.
Janwillem Acket, chief economist at Julius Baer Group Ltd. (BAER) in Zurich, said there’s a “99 percent chance” that Jordan will be elected new president, while any of the deputies would be “experienced and good” candidates to join the board.
“We need a flawless SNB, especially in these stormy waters,” Acket said. “We can’t rule out anything, but an external candidate wouldn’t be ideal as a new president. Jordan was involved in every important decision; he’s perfect.”
Jordan, who joined the board in 2007 and became deputy chairman three years later, said on Jan. 9 he’s willing to take the top job and reiterated that the central bank is ready to defend the cap with the “utmost determination” if needed.
Beatrice Weder di Mauro, a Swiss native and a member of German Chancellor Angela Merkel’s council of economic advisers, is among the possible board candidates, as is the Swiss government’s chief economist, Aymo Brunetti, according to economists and newspaper reports. Acket also named Thomas Straubhaar, head of the HWWI economic institute in Hamburg, and Serge Gaillard, head of the Swiss government’s labor department and a former member of the SNB Bank Council.
The government said yesterday it first wants to see the results of an internal probe into the financial transactions of the two remaining board members and the three deputies in the three years through 2011 before making an appointment. The SNB has already pledged to toughen its internal rules.
“Markets seem inclined to test the SNB’s commitment,” said Reto Huenerwadel, an economist at UBS AG in Zurich. If it takes until May to find a new chief, “it remains to be seen whether financial markets will provide a similarly extended grace period.”
The Bank Council has appointed a panel to look into possible candidates.
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